UPDATE 2-CS: Wachovia, BofA may cut dividend to preserve capital

jueves 3 de abril de 2008 18:59 CEST

(Adds details; updates share movement)

April 3 (Reuters) - Credit Suisse said Bank of America Corp (BAC.N: Cotización) and Wachovia Corp WB.N may lower their dividends as an option to preserve capital and guard against significant credit quality deterioration over the near-term.

Wachovia appears most at risk for a dividend cut in the near-term, given its vulnerability to residential housing and relatively thin coverage ratios -- a measure of the company's ability to meet its debt obligations, the brokerage said.

While both Bank of America and Wachovia's capital footing and earnings are particularly vulnerable in the current environment, Bank of America's business line diversity and internal capital generation provides it greater flexibility when compared to its smaller peer, Credit Suisse said.

Since February, analysts of at least two brokerages have predicted dividend cuts at certain U.S. banks in 2008.

Bernstein analyst Kevin St. Pierre had, in February, said that several U.S. banks, including Bank of America and Wachovia, were likely to cut their dividends to shore up capital.

Last week, Oppenheimer & Co analyst Meredith Whitney had also said that she expected Wachovia and Citigroup Inc (C.N: Cotización), along with other U.S. banks, to announce dividend cuts in April as banks' earnings would not support current dividend payouts in 2008.

However, Wachovia Chief Executive Ken Thompson had said in January that the bank's 64 cents-per-share quarterly common stock dividend was safe.

NEAR-TERM CAPITAL RAISE?   Continuación...